Forex crises, oil price trigger debate on fuel price increase

The foreign exchange crises and increase in the price of crude oil at the international market have trigger agitations on fuel price hike in the country.

Currently the cost of refine product import has risen significantly in the, the situation that forced many marketers to abandon the import business.

Pan-African lender Ecobank said in a report yesterday that while the increase in crude oil prices is expected to boost the country’s oil revenues, the cost of petroleum products may also have to increase.

The bank in its Nigeria 2017 Oil Outlook prepared by experts in the oil industry said it expects further deregulation of the downstream this year due to the rising crude oil prices and exchange rates.

“Currently landing costs have risen significantly but the NNPC is the main importer for gasoline and has thus imbibed some of the increase in product costs to ensure prices remain unchanged. However, it could be forced to raise prices or fully deregulate to avoid increasing its operating deficits,” the report said.

The Nigerian National Petroleum Corporation (NNPC), in its latest monthly report, acknowledged that it had been bearing the brunt of being the major importer of petrol, in spite of liberalisation of petroleum products and government’s intervention to ease marketers’ access to foreign exchange.

The bank’s report predicted an increase in fuel consumption in 2017 driven largely by expected improvement in the macroeconomic environment and stronger efforts to improve supply of petroleum products from the NNPC refineries and imports.

Meanwhile, the Petroleum Products Pricing Regulatory Agency (PPPRA) said it has not embarked on upward or downward review of fuel price or its template.

An official of the agency who craved anonymity told our reporter that the reality on ground was that its template lasted update in May 2016 remained valid.

“What we are even trying to do is to review downward or yank off some items. There is a committee of the PPPRA which has been meeting over this. They are trying to see if they can convince the Nigeria Ports Authority (NPA) to render their charges in naira instead of dollar, and for the PEF and depot charges to drop.”